Over the weekend the Irish government formally applied for financial assistance of “over €70bn but definitely less than €100bn”- let’s just say a hell of a lot. Other Eurozone members can now breathe a sigh of relief that Irish heads are no longer buried in the sand of Killiney Beach. The Irish government has a difficult time ahead in selling this bail-out package to the Irish people, but what choice do they have?
A very stirring editorial in the Irish Times on Friday summed it up by asking; “did the men of 1916 die for a bailout from the German chancellor with a few shillings of sympathy from the British chancellor on the side”.
The few shillings in question are a contentious issue for UK Chancellor George Osborne who has pledged £7bn in support to Ireland. This money will have to be borrowed by us as we are no money either, and don’t forget the UK taxpayer owned Royal Bank of Scotland and Lloyds already have loans to Ireland of £53bn and £26.7bn respectively. So the total size of the EU bail-out package to Ireland is about equivalent to what we alone are owed by Ireland.
The euro has pushed higher for the fourth day after news of the rescue package were announced. Complete Euro meltdown has been averted for now but does placing a sticking plaster over a deep gash heal the wound or just make it look better to others?
Ratings agency Standard & Poor’s have downgraded New Zealand’s foreign currency sovereign outlook to “Negative” from “Stable”. The credit rating was left at AA+ but S&P warned the main risk was a significant weakening in the credit quality of New Zealand’s banking sector. They also voiced concerned that a prolonged struggle to recover from the global recession due to diminishing demand for its goods and services in the US, UK and Japan would widen the current account deficit leaving NZ more dependent on foreign capital.
GBPNZD is 3-cents higher this morning as a result.
The only data release this afternoon is November Eurozone “flash” consumer confidence at 15:00pm which is forecast to stay steady at -11.
Tuesday and Wednesday are extremely data heavy days with numbers from the US including Q3 2nd estimate GDP, October existing home sales, personal income and spending, durable goods orders and new home sales ahead of the Thanksgiving Day holiday Thursday. In the UK Q3 GDP revision on Wednesday will be the focus with the chance that annualised growth figure may surprise to the topside at +2.8%.
20-years ago today the “Iron Lady” Margaret Thatcher resigned as Prime Minister after her battle against the prospective single currency and disagreements with pro-European colleagues forced her out. Thatcher knew the Euro was a bad idea and would eventually divide Europe but the world chose not to listen.